Well, Meg Whitman now has the responsibility for making the right move at HP, and frankly I’m not encouraged by some of her early comments. The only thing that seems to be on the table, of all the changes that brought down Leo Apokether’s reign there, is the fate of the PC business. That may well be the only thing that was a smart move. What HP has to avoid above all is business as usual, and the second-greatest risk is looking indecisive. With one chance to get it right, Whitman seems to be getting it wrong.
PCs haven’t been a great business for years now, simply because consumerism has driven down the prices and tipped the scales of innovation to the software side. The hardware platforms are all basically the same, no matter what Mac aficionados think; it’s the operating system and software that matters. Even there, price pressures are formidable. Now with the onrush of tablets, we’re seeing the web-client dimension of PC use vanish, and with it likely even more of the profits.
HP’s problem was that it didn’t see the tablet shift coming, not that it needed to be more of a software player. The thing that HP needed was a cloud vision, a vision of a future of network-connected appliances that could marshal a lot of power and knowledge and focus it on something a user was carrying around in a pocket, briefcase, or purse. Yes, software is an element of that, but it’s not all of it.
I’ve learned by talking to users worldwide that everyone understands the pieces of the cloud, but it’s the cloud as a conceptual whole that they don’t quite get. As a whole, the cloud is the notion of a new ecosystem with new relationships, new value focus points, etc. HP might have shown us that conceptual whole, by dumping PCs and focusing on the cloud. Instead HP dumped PCs and dumped the cloud too, and Whitman is proposing to rethink the dumping PCs part. Maybe she thinks that’s best now because it’s too late to get the cloud back, but it’s not going to work.
There’s a lesson here in the networking side. The cloud is a symbol of the new age of communications-connected intelligence, the age that empowers every client because it’s connected to every possible service. This is an age that networking has created; one that’s not generating value to networking in proportion to its contribution. That’s because network executives have been just as blind, dare we say as dumb, as HP was. The cloud should have been their vision, but they were simply not agile enough to grasp it.
Networking companies recognized, as HP did, that somehow software was involved in the solution, but they never realized that just as “hardware” encompasses both mainframes and smartphones, doorknobs and drawer pulls, “software” means too many things to be a useful goal. “Serviceware” or “cloudware” was needed, and that’s middleware software built on the cloud model.
Another tie here is that HP is now terribly wounded, perhaps even fatally, and this pulls a major competitor off the field in terms of data center competition. HP might have been a leader here, and that’s going to be very hard to achieve in the current situation. Autonomy is the wrong software; rethinking a PC spin-off is the wrong decision. Nobody could benefit here as much as Cisco, who has been punching out at competitors with edgy marketing because it needs to recover its own position.
The problem is that to succeed, Cisco still has to face and address the reality that HP didn’t face—the cloud. There is no enterprise on this planet, no network operator, that isn’t a potential buyer or seller of cloud services. I’ve seen this proven in major markets and emerging markets. The cloud is the symbol of the new IT, the new network. You stand or fall—in the cloud.